Forlan, who earned 112 caps for Uruguay before announcing his international retirement in March, recently left Japanese club Cerezo Osaka after his 18-month contract expired.

"With a surname linked to the club's history, son of a champion of the Americas and the world with Penarol, Diego will wear the yellow and black as he did when he was a boy and dreamt of being a professional footballer," the club said.

The former Manchester United, Villarreal, Atletico Madrid and Inter striker will make his debut in his native country on Aug. 8, Uruguayan media reported. He will be presented on Saturday at 12:30 local time.